Cirque and Sa Dena Hes bought by Teck, Cominco

Associated companies Teck (TSE) and Cominco (TSE) each plan to acquire 25% of the Cirque and Sa Dena Hes zinc-lead properties in Western Canada.

The balance will be owned by two offshore partners, Korea Zinc and Samsung. Both Cirque (formerly called Stronsay) and Sa Dena Hes are among the assets of Curragh, which was placed into receivership in 1993. The joint-purchase offer made to receiver Coopers & Lybrand does not involve any of Curragh’s assets in the Faro area of the Yukon.

The four partners will pay an estimated $43 million for the two base metal projects. But both Teck and Cominco stress that resumption of production at Sa Dena Hes and development of the Cirque deposit will depend on an increase in prevailing metal prices.

“The rationale for this acquisition is that we expect zinc prices will go up again some day,” said Cominco President Robert Hallbauer. “And that is when we will look at re-opening Sa Dena Hes and developing Cirque.” Sa Dena Hes is near Watson Lake, Yukon. The underground zinc-lead-silver operation began production in August, 1991, and has been idled since December, 1992. Production that year was reported as 125,228 tonnes of zinc and lead concentrates from 527,411 tonnes of ore with a combined grade of 18%. The reserve base is believed sufficient for about 8-9 years of production.

The Cirque project, near Williston Lake in northeastern British Columbia, has completed the review process. A mine development certificate was issued by the provincial government, although no development work took place as Curragh was unable to find a joint-venture partner to help finance the $140-million (estimated) direct project costs.

At last report, drill-indicated reserves stood at 50 million tonnes averaging 8% zinc and 2% lead, sufficient for about20 years of production. The deposit is hosted in a prospective belt of rocks which Teck has been actively exploring.

Last October, Teck reported the discovery of a new zone of stratabound zinc and lead mineralization at its Driftpile project, about 100 km north of Cirque. The effort was focused on a prospective area away from a low-grade resource previously identified on the property.

Ten holes from the 13-hole program intersected the zone and returned zinc values as high as 20%. Two of the better intersections are: 5.23 metres grading 20.67% zinc and 8.3% lead; and 12 metres of 10% zinc and 1% lead. More work is planned for this year.

Teck also entered an agreement with Ecstall Mining (VSE) to increase its property holdings near the Driftpile project. At that time, it was speculated that Teck and Cominco might be interested in Cirque (and other deposits in the region) as a possible future source of feed for the latter’s smelter complex at Trail, B.C.

Hallbauer said this scenario is “possible,” though he noted that Korea Zinc, one of the partners in the joint purchase, also has a smelter in Korea.